IMPACT OF THE REGULATION CHANGES TOWARDS THE COMPANY
The framework for the telecommunications industry is comprised of specific laws, government regulations,
ministerial regulations and ministerial decrees enacted and issued from time to time. The current
telecommunications policy was first formulated and articulated in the Government’s “Blueprint of the
Indonesian Government’s Policy on Telecommunications”, contained in MoC Decree No.KM.721999 dated September
17, 1999.
1. Telecommunications Law
The telecommunications sector is primarily governed by Law No.36 of 1999 “Telecommunications Law”,
which became effective on September 8, 2000. The Telecommunications Law sets guidelines for industry
reforms, including industry liberalization, facilitation of new entrants and enhanced transparency and competition.
The Telecommunications Law eliminated the concept of “organizing entities” thereby ending our and Indosat’s
responsibility for coordinating domestic and international telecommunications services, respectively. To enhance
competition, the Telecommunications Law prohibits monopolistic practices and unfair competition among
telecommunications operators.
The Telecommunications Law was implemented through several Government Regulations, Ministerial Regulations
and Ministerial Decrees. The most important of such regulations include:
Government Regulation No.522000 regarding Telecommunications Services.
MoCI Regulation No.1PERM.KOMINFO012010 dated January 25, 2010 regarding Operation of
Telecommunications Networks. MoC Decree No.KM.212001 regarding the Provision
of Telecommunications Services that was most recently amended by MoCI Regulation No.82015
regarding the Fourth Amendment of Decree of the Minister of Communication No.KM.212001 regarding
the Provision of Telecommunications Services.
MoC Decree No.332004 regarding Supervision of Healthy Competition in the Provision of Fixed Network
and Basic Telephony Services. MoC Decree No.KM.42001 dated January 16, 2001
regarding the Determination of Fundamental Technical Plan National 2000 for National Telecommunications
Development most recently amended by MoCI Regulation No.09PERM.KOMINFO062010 dated
June 9, 2010 regarding the sixth amendment of MoC Decree No.KM.42001 regarding the Determination
of Fundamental Technical Plan National 2000 for National Telecommunications Development.
2. Telecommunications Regulators
In February 2005, the authority to regulate the telecommunications industry was transferred from the
MoC to a newly-established Ministry, the MoCI. Pursuant to authorities assigned to him through Telecommunication
Law, the Minister of Communication and Information sets policies, regulates, supervises and controls
telecommunications industry in Indonesia. On October 28, 2010, MoCI engaged in certain organizational and
administrative reforms that included transferring licensing and regulatory authority to two newly established general
directorates, the Directorate General of Posts and Informatics Resources and Equipment “DGRE” and
Directorate General of Post and Informatics Operations “DGPIO” pursuant to MoCI Regulation No.17PERM.
KOMINFO102010 regarding the Organization and Administration of Ministry of Communication and
Information. Following the reforms, certain adjustments were made through MoCI Regulation No.15PERM.
KOMINFO062011 dated June 20, 2011 regarding title adjustments in a number of Decrees andor MoCI
regulations that regulate Special Materials in Post and Telecommunications andor in Decrees of the Director
General of Posts and Telecommunications, which transfer all substances related to the postal and telecommunications
sectors to the DGPIO including licensing, numbering, interconnection, universal service obligation and business
competition. Meanwhile, matters related to radio frequency spectrum and standardization of telecommunications
equipments were transferred to the DGRE.
Following the enactment of the Telecommunications Law, the MoC established an independent regulatory
body as stipulated in MoC Decree No.KM.312003 dated July 11, 2003 regarding the Establishment of the ITRA
which was later revoked by MoC Regulation No.KM.36 PERM.KOMINFO102008 dated October 31, 2008 and
amended by MoCI Regulation No.1PERM. KOMINFO022011 dated February 7, 2011 “MoCI
Regulation No.362008”. Pursuant to MoCI Regulation No.362008, the ITRA was assigned the authority to
regulate the Indonesian telecommunication industry, including the provision of telecommunication networks
and services. The ITRA which is chaired by the Director General of Post and Informatics Operations and comprises
of nine members, including six members of the public,
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FINANCIAL AND PERF
ORMANCE HIGHLIGHT
MANA GEMENT
REPOR T
PREF A
GENERAL INF
ORMA TION OF
TELK OM INDONE
SIA
MANA GEMENT’S DISCUSSION
AND ANAL Y
SIS
CORPORA TE GO
VERNANCE
SOCIAL AND ENVIRONMENT
AL
RE SPONSIBILITY
APPENDICE S
and three members selected from Government institutions DGRE and Director of DGPIO and a government
representative appointed by the Minister of Communication and Information.
3. C l a ss i f i c at i o n a n d L i ce n s i n g o f Telecommunications Providers
The Telecommunications Law organized telecommunication services into following three categories: i provision of
telecommunication networks, ii provision of telecommunication services, and iii provision of special
telecommunications services.
Licenses issued by MoCI are required for each category of telecommunications services. MoCI Regulation No.12010
and MoC Decree No.KM.212001 dated May 31, 2001 regarding the Operation of Telecommunications Services,
as last amended by MoCI Regulation No.82015 regarding the Fourth Amendment of Decree of the Minister of
Communication No.KM.212001 regarding the Provision of Telecommunications Service, are the principal
implementing regulations governing licensing.
MoCI Regulation No.12010 classified network operations into fixed and mobile networks. MoC Decree No.KM.212001
categorized the provision of services into basic telephony services, value-added telephony services, and multimedia
services.
4. Introduction of Competition in the Indonesian Telecommunications Industry
In 1995, we were granted a monopoly to provide local fixed line telecommunications services until December
31, 2010, and DLD services until December 31, 2005. Indosat and Satelindo which subsequently merged with
Indosat were granted a duopoly for provision of basic international telecommunications services until 2004.
As a consequence of the Telecommunications Law, the Government terminated our exclusive rights to provide
domestic fixed line telephone and DLD services and Indosat’s and Satelindo’s duopoly rights to provide basic
international telephone services. Instead, the Government adopted a duopoly policy to create competition between
Indosat and us as comprehensive service and network providers.
5. DLD Services
To liberalize DLD services, the Government amended the National Telecommunications Technical Plan pursuant
to MoCI Decree No.6PM.KOMINFO52005 dated May 17, 2005 “MoCI Decree No.62005” to assign each
provider of DLD services a three-digit access code that would permit their customers to select an alternative
DLD services provider by dialing the three-digit access number. MoCI Decree No.62005 did not provide for
immediate implementation of the three-digit system for DLD calls, but as the first DLD service provider, we were
required to gradually open our network to the three-digit access codes in all coded areas throughout Indonesia
by April 1, 2010. We were assigned the “017” DLD access code, while Indosat was assigned “011”. The MoCI thereafter
amended the National Telecommunications Plan as provided in MoCI Decree No.43PM.KOMINFO122007
dated December 3, 2007, “MoCI Decree No.432007”, which delayed the deadline for the implementation of
three digit access code for DLD calls throughout all the area code in Indonesia until September 27, 2011.
Pursuant to MoCI Decree No.432007, we opened our network to the “01X” three-digit DLD access service in
Balikpapan by April 3, 2008. Since that date, our customers are able to make DLD calls from Balikpapan by first
dialing Indosat’s “011”. As stipulated in MoCI Regulation No.432007, we have provided a nation-wide network
for three-digit access code for fixed and fixed wireless DLD with “01X” that can be used by Indosat or other
licensed operator starting September 27, 2011. To date, no other licensed operators have submitted a request
to us to connect their networks and enable DLD access.
6. IDD Services
We received our IDD license in May 2004 and began offering IDD fixed line services to customers in June
2004 using the “007” IDD access code. The Indosat IDD access code is “001”. Our December 2005 interconnection
agreement with Indosat enables Indosat’s network customers to access our IDD services by dialing “007”
and our network customers to access Indosat’s IDD services by dialing “001”.
7. Limited Mobility Wireless Services
MoC Decree No.KM.352004 dated March 11, 2004 regarding Implementation of Fixed Wireless Networks
with Limited Mobility, as amended by MoCI Decree No.16 PERM.KOMINFO062011 dated June 27, 2011, “MoC
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